Wednesday, July 25, 2007

Jeffries calls AY carve-out "offensive"--and his base agrees

As a candidate last year, Hakeem Jeffries was a qualified supporter of Atlantic Yards. And as a freshman member of the State Assembly, he still welcomes the project’s affordable housing.

But Jeffries' posture has gotten tougher lately, and last night he delivered an eloquent criticism of the project, declaring that promised affordable housing was easily matched by government support for developer Forest City Ratner and that the “Atlantic Yards carve-out,” a tax break available only to the developer, was “offensive” because it promoted “economic segregation.” And his audience, responding to the notion of special treatment, seemed to agree.

(While the "carve-out" would treat the project differently, it also would preserve the project configuration as approved last year before revision of the tax break. So it’s a matter of perspective.)

Jeffries’ Town Hall meeting last night, "My First Six Months Serving You," was actually less about Atlantic Yards than about bread-and-butter constituent service. Jeffries, wielding the power of his position, brought officials from state housing and health agencies, and the city education department to the Brown Memorial Baptist Church in Clinton Hill to address his base.

And while Jeffries, a local guy done good, may be a former corporate lawyer who wears cufflinks, that base, at least from the 100-person crowd last night, is mostly working- and middle-class black folk. The yuppies (of whatever color) who’ve bought the luxury condos popping up in Clinton Hill, Prospect Heights, and environs were in scarce supply.

The AY issue

But it didn’t take Daniel Goldstein of Develop Don’t Destroy Brooklyn, one of the few Atlantic Yards activists in the audience, to raise the Atlantic Yards issue. It was a black woman of a certain age, who, speaking with dismay more than outrage, crystallized the issues that have emerged in the interregnum since the project was approved last December.

“Bruce Ratner has gotten lots and lots of money from the city and the state, with no guarantee that there will be affordable housing,” she said, also questioning whether “he’s going to ameliorate the congestion that is bound to be caused by that many people coming into the community. It’s a real concern… Can you update us on that?”

421-a changes

Jeffries never got to the congestion issue but instead offered a primer on the 421-a tax break, enacted to jump-start housing in areas where construction was moribund, now anachronistic in “hot” neighborhoods like Clinton Hill, where empty lots sprout luxury condos, some landlords of unregulated apartments jack up rents, and churches like Brown Memorial see their congregations thin as residents disperse for cheaper housing.

The state’s 421-a reform would require 20% low-income housing in each building that got the tax break, except for Ratner’s Atlantic Yards. The “Atlantic Yards carve-out” would allow condo buildings in the project without affordable housing to get the tax break. It also would nudge higher the allowable incomes for the affordable housing.

Jeffries explain how the law was changed, and would require that any properties that get the tax break “in our community” would require, in exchange, 20% of the units affordable to households at 60% of the Area Median Income (AMI), or about $42,000 for a family of four. The audience clapped. He added that the legislation would require that half the affordable units be reserved for people within the local Community Board. That also drew claps.

Amended on the sly

Then Jeffries got to the Atlantic Yards "carve-out," deeming the episode “one of those things you find out when you’re in Albany.” He noted: “I don’t really find out until the law has been amended, this provision has been negotiated to treat Atlantic Yards differently than any other project in New York City. I finally found out about five or ten minutes before the reporters started calling.”

“Of course I’m a little bit annoyed. I voted against that particular bill, 9293, the carve-out provision, because I’m of the view, consistent with your question, that enough subsidy has already been given to this developer. There’s absolutely no reason to treat this project any more favorably than any other project that’s being built. So subsequent to voting against this, we [he and State Senator Velmanette Montgomery] sent a letter to the developer, saying ‘you need to comply with the law as it applies to everybody else."

"'And anything short of you complying with the law—Bruce Ratner, Forest City Ratner—anything short of you doing that, means to me, that the government should review completely the entire merits of this project.’ Because the project was sold to us in large part as one that would bring needed affordable housing to our community. But you can’t on the one hand sell it to us as a project that’s going to bring affordable housing to the community and on the other hand, at the eleventh hour, negotiate a special provision where you get treated differently than everyone else in the city.”

“And how is he being treated differently? The most offensive way, to me—to his credit, the developer has agreed, as it relates to the rental units, to do 50% of the rental units affordable. He should be credited with that. What they said to me was, ‘We have this dramatic rental agreement, so that should be enough. We shouldn’t really have to comply with the law as it relates to the luxury condominiums.’”

Honing in

Then Jeffries took it up a notch, if not to the passionate level of Council Member Letitia James (a project opponent who endorsed Jeffries’ opponent, Bill Batson, but was in the audience last night), but with a definite edge.

“And my view was, yeah, this is an extraordinary thing, that you made 50% of the units affordable. But there were extraordinary steps that were taken by government to make this project happen,” he declared. The audience began murmuring call-and-response agreement.

“The state gave $100 million. The city gave $200 million. They waived the ULURP process. You don’t have to comply with the zoning requirements, so you can build ten, 15, 20 stories higher than anybody else, making additional money. And beyond all that, you have the ability to use the extraordinary power of eminent domain. So, your 50/50 deal is extraordinary, and there were extraordinary things that the government did in return. So as far as I’m concerned, that deal is done, signed, sealed, and delivered, let’s deal with the future.”

Several people clapped.

(Note that the 50/50 program, more precisely a 50/30/20 program of market, middle- and low-income housing, is a city subsidy program available to other developers, and other developers who participate don’t get the private rezoning and extra subsidies that Forest City Ratner has been promised for Atlantic Yards.)

“And as far as I’m concerned, you can’t have a condominium building going up in the Atlantic Yards project where, if it went up in any other part of the 57th Assembly District, that developer would have to build 20% of those units affordable to people in the community. But because of the Atlantic Yards carve-out, he doesn’t have to do that. And I just think that that’s wrong. And so I’m fightin’ it. The city and Mayor Bloomberg, to his credit—he’s been a big supporter of this project--is working closely with me and has said to the developer, ‘If you don’t comply with the law, we’re holding $100 million of the money that we promised to you back.’” More claps.

Jeffries identified the tax break as being worth up to $175 million, as initially reported; city officials have also said the value is closer to the $300 million.

Economic segregation?

“On the one hand, the developer sold to us the notion, as it relates to the 50/50 housing, that there would be no economic segregation. That’s a good thing," he pointed out. "In the law, they negotiated a provision that would allow them to have all luxury condominiums and still get the tax break.”

Forest City Ratner and project supporters must feel some frustration, since the rules got changed on them. The “Atlantic Yards carve-out” would preserve the Atlantic Yards plan as approved last December, even as the city and state began tightening the tax break. On the other hand, the "carve-out" also comes after the city more than doubled its planned spending on Atlantic Yards.

The project has gone through changes; as proposed in December 2003, only 4500 rental units were publicly announced (though condos were quietly in the cards), but in May 2005, once the Affordable Housing Memorandum of Understanding (MOU) with ACORN was signed, the project changed.

Forest City Ratner added up to 2800 condos, later shaving that back to 1930 condos, apparently necessary, in the company’s calculation, to drive sufficient profit. (A developer doesn’t lose money producing affordable housing, but the profit margins may be lower.)

ACORN’s Bertha Lewis has declared the project would ultimately be a 50/50 plan, in part because of the 600 to 1000 for-sale affordable units, on-site or off-site, that the developer has pledged to “work towards,” though that would bring the affordable percentage to about 40%. But Lewis never charged “economic segregation” because of the condo-only buildings.

The latest conflict comes about because of bad timing, at least from the developer's point of view. The Atlantic Yards approval process took so long that it was delayed until the city and state reformed 421-a. Had Atlantic Yards been approved earlier last year, with no pending lawsuits, Forest City Ratner might have begun construction on the condo buildings and escaped the law’s revision, Jeffries’ scrutiny, and the civic outrage at special treatment.

What next?

Jeffries said that, while Forest City Ratner didn’t respond formally to his letter, he and representatives of the developer had a conversation, and the city has laid out its position. “The Speaker of the Assembly [Sheldon Silver] and [Housing Chair] Vito Lopez have been supportive of efforts to get some changes into the carve-out provision,” he said, using language that suggested potential compromise rather than a full removal of the provision.

“We go back up to Albany on Thursday. I’m hopeful that it will be on the agenda, but certainly we’ll push, legislatively, to amend the law," he said. "Whether they respond or not, Forest City Ratner, it’s not really their choice. They may use the influence they have in Albany, particularly with the Senate, to try and protect the provisions that they have, but we’re bringing everything that we have to bear to get them, legislatively, to comply with the law.” So the issue remains in question.

In his closing remarks, the Rev. Clinton Miller, Senior Pastor of Brown Memorial and a friend and supporter of Jeffries, reminded the audience they needed to hold government and corporate entities responsible, and to adapt to changes so community members “have an option to stay” in the face of gentrification. He also recommended the documentaries Sicko, about health care, and Brooklyn Matters, about Atlantic Yards.

On-site for-sale units

Afterward, I asked Jeffries about the 200 for-sale on-site affordable units promised by Forest City Ratner when the project was approved in December. Nothing has been announced by the state, and he and Montgomery had queried the developer in their letter.

Forest City Ratner had in conversation recommitted to that number, he said, noting that 200 would be only about 10% of the 1930 condos, not 20%, as would be required by the legislation.

The developer had not announced the income ranges for such units; the Affordable Housing MOU contemplates that they would be in the “upper affordable” income tiers. Given that the range goes up to 140% of AMI, it would seem to be tough to conform to the law, which caps affordable units at 60% of AMI. So that issue remains in question.

Beyond AY

Housing was chief among the issues discussed last night. Jeffries told the audience that he and Montgomery want to tie homeowner tax increases to income and ability to pay, a response to rising rates caused by rising area property values, even though some longtime homeowners are on fixed or low incomes. (Presumably, such homeowners might also be able to tap the equity in their increasingly-valuable homes.)

Also, calling Bedford-Stuyvesant, which he represents in part, "ground zero for the subprime lending crisis and predatory loans," Jeffries said that the state, emulating Ohio, is in the process of forming a reserve fund to assist homeowners, and also will push a public education campaign.

Many renters, he said, are being victimized by landlords who harass them or neglect the property in order to empty out the building and raise rents; he brought two officials from the state Department of Housing and Community Renewal to speak to the audience and be available to answer questions.

One of them mentioned how New York is a leader in allowing Section 8 housing subsidies, typically used for rent, to be used as a down payment to buy housing. The number, however, is just 38, and the solution to the city's affordable housing crisis was beyond the scope of the meeting.

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